3 - 5 minute read
In a recent appearance on the Unchained podcast hosted by crypto journalist Laura Shin, Congressman Tom Emmer has criticized the current approach of Securities and Exchange Commission (SEC) Chair Gary Gensler to regulating the cryptocurrency sector, labeling him a “bad-faith regulator”. Emmer revealed that Gensler’s continued “regulation by enforcement” approach, targeting primarily crypto firms, is a cause for concern.
Emmer has previously been vocal about his support for the cryptocurrency industry and his desire to see greater regulatory clarity implemented. However, his recent comments show that he is now less convinced that Gensler’s leadership of the SEC is likely to lead to positive outcomes for the emerging industry.
Emmer pointed to the example of Coinbase, which has had a particularly difficult time dealing with the SEC. According to Emmer, Coinbase had been actively trying to work with the agency by seeking compliance feedback on its staking products and other matters. However, despite promising an open-door policy, Gensler’s SEC refused to provide feedback. Instead, the SEC slapped Coinbase with a Wells Notice regarding the very issues on which it was asking for feedback, indicating that the agency was pursuing a policy of “regulation by enforcement”.
Great interview by @laurashin with @GOPMajorityWhip! Congress is working in their districts this week and next, but expect a VERY busy last 2 weeks of April for crypto policy as legislation and oversight of the regulators ramps up. Stay tuned https://t.co/ZSsTFJ9pt7— Ron Hammond (@RonwHammond) April 7, 2023
Open Door Policy
Despite the difficulties faced by Coinbase, Gensler has maintained his view that the agency has an amicable ‘open door policy’. Gensler continues to call on crypto firms to register with the SEC to maintain compliance with securities laws. However, the anti-crypto-focused approach and the lack of clarity in the current regulatory landscape do not inspire confidence or trust from industry leaders.
An Anti-Crypto Agenda
Emmer, like many others in the crypto community, has raised concerns that the SEC, under Gensler’s guidance, is pursuing an anti-crypto-focused agenda, regulating primarily through enforcement. Emmer has highlighted the difficulty that this approach creates for crypto firms, especially startups with limited resources, and the lack of clarity that it brings. Regulating in such a manner only serves to drive innovation from the U.S. towards more accommodating jurisdictions.
As the SEC continues to pursue an approach focused on enforcement, it’s important that crypto firms work to maintain compliance with securities laws to avoid possible enforcement actions. However, it’s also important that regulators work to foster an environment that allows for innovation while also protecting consumers. Without greater clarity and collaborative engagement from regulators, the U.S. risks falling behind in the race to become a global leader in the emerging cryptocurrency industry.